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M/s. Farmson Basic Drugs Pvt. Ltd. Versus ITO 10 (1) (1) , Mumbai

2016 (2) TMI 830 - ITAT MUMBAI

Validity of assessment - non-service of notice u/s.143(2) - Held that:- there is no evidence or even presumption of service of notice u/s.143(2) by post on the assessee. Since in the instant case, the department has not been able to demonstrate that notice u/s.143(2) was served within the statutory time limit, the assessment made on the basis of such invalid notice could not be treated to be valid assessment and, hence, such assessment order deserves to be treated as null and void and liable to .....

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espondent : Shri Abani Kanta Nayak, D.R. ORDER Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 16.12.2010 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 1994-95. Earlier the matter was heard on 21.7.2015 and Sh. Milin K. Mehta (AR) appeared on behalf of the assessee. However the matter was re-fixed for hearing for 12.2.2016. On the said date, no one appeared on behalf .....

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d that the AO has held that the notice was served on the appellant within the statutory period without providing sufficient material to the appellant and purely on the basis of assumptions, surmises and conjectures. 2. The learned Commissioner of Income Tax (Appeals) erred in fact and in law in confirming the action of the Assessing Officer in again disallowing loss incurred in the business of transportation of goods and assessing ₹ 72,000/- as income of the appellant applying provision of .....

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rming the action of the Assessing Officer in disallowing depreciation of ₹ 1,61,510/- on account of leased assets during the year. 4. The learned Commissioner of Income Tax (Appeals) erred in fact and in law in confirming the action of the Assessing Officer in initiating penalty proceedings u/s. 271(1)(c) of the Act. 5. The learned Commissioner of Income Tax (Appeals) erred in fact and in law in confirming the action of the Assessing Officer in charging interest u/s. 234B of the Act. 6. Th .....

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to be quashed as no notice Under Section 143(2) had been served upon the assessee within the statutory period of 12 months from the end of the month in which the return was filed by the assessee. 3. This is a second round of litigation before us. The facts relating to this issue are that the assessee filed return of income on 25.11.1994. The return was selected for scrutiny. Notice u/s.143(2) was issued on 14.11.1995 by the Assessing Officer (hereinafter referred to as the AO) which was dispatch .....

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d intimated to the assessee that the earlier notice was issued on 14.11.1995 the photocopy of the receipt of registered post was also supplied to the assessee. The AO observed that the Department of Posts vide its letter dated 12.12.1996 had certified the delivery of letter containing the notice u/s.143(2) dispatched on 20.11.1995 from the Central Building Post Office. The assessee further filed objections stating that the receipt issued by the Department of Posts did not contain the address of .....

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rved within the prescribed time. 5. Thereafter, the assessee carried the matter before the ITAT. The ITAT, vide order dated 23rd March 2005 passed in ITA No.6534/M/1999, observed that the AO had rejected the assessee's claim without giving proper opportunity to examine the papers and letter issued by the postal authorities. Under the circumstances, the ITAT referred the issue to the file of the AO with a direction to supply evidence including the letter issued by Postal authorities to the as .....

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otice u/s.143(2). The AO held that after lapse of 10 years it was almost impossible to find out the date of delivery and letter from the postal authorities. Regarding nonmention of address of the company, the AO held that the letter of postal authorities indicated the RPAD Number of letter which was being posted by RPAD and address mentioned thereon. The AO further held that the postal authorities had admitted the delivery of letter/notice in the normal course which would have been delivered wit .....

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the Assessing Officer was challenged before the learned CIT(Appeals). It was submitted that the notice was not served upon the assessee within the statutory period. The learned CIT(Appeals) however rejected the pleas of the assessee and upheld the findings of the AO on this issue. The assessee has thus come in appeal before us. 8. We have considered the rival pleas raised by the parties. The facts, as emerging out from the above discussion are that the return was filed on 25.11.1994 with limita .....

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the General Clauses Act and has held that the notice was deemed to be served upon the assessee in due course. 9. On the other hand the contentions raised by the assessee are that no such presumption can be made regarding service of notice sent through registered post. The assessee had never received the alleged notice dated 14.11.95. The only notice received u/s 143(2) was notice dated 18.9.96 which was time barred. The assessee had admitted the service of noticed dated 18.11.96. Had the earlier .....

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upon whom served. 10. It is to be noted that section 143(2) of the Act requires that where return has been filed by an assessee, if the Assessing Officer considers it necessary or expedient to ensure that the assessee has not understated the income, or has not computed excessive loss, or has not under-paid tax in any manner, he shall serve on the assessee a notice requiring him either to attend his office, or to produce, or cause to be produced there, any evidence on which the assessee may rely .....

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s considered the very issue and it has been held that the Assessing Officer has to necessarily follow the provisions of section 142 and sub-sections (2) and (3) of section 143. The Hon ble Apex Court did not accept the submission of the Revenue that the requirement of the notice under section 143(2) can be dispensed with or that the same is a mere procedural irregularity. 11. It is a fact on the file that the notice dated 14.11.95 was sent on the address given by the assessee of its office at Ba .....

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livering or transmitting a copy thereof, to the person therein named,- (a) by post or by such courier services as may be approved by the Board; or (b) in such manner as provided under the Code of Civil Procedure, 1908 (5 of 1908) for the purposes of service of summons; or (c) in the form of any electronic record as provided in Chapter IV of the Information Technology Act, 2000 (21 of 2000); or (d) by any other means of transmission of documents as provided by rules made by the Board in this beha .....

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the above provision, the service of notice by post is a valid service in terms of the provisions contained in Section 282(1) of the Act. The Hon ble Delhi High Court in the case of CIT Vs. Yamu Industries Limited(2008) 306 ITR 309 (Del) has examined the above provisions and has held that the requirement of secton 282 of the Act is that notice may be served upon the person named therein, either by post or if it were a summons issued by a Court under the Code of Civil Procedure. The Hon ble Delhi .....

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th, the issue of summons for service in the manner provided in rr. 9 to 19 (both inclusive), also direct the summons to be served by registered post, acknowledgement due, addressed to the defendant, or his agent empowered to accept the service, at the place where the defendant, or his agent, actually and voluntarily resides or carries on business or personally works for gain: Provided that nothing in this sub-rule shall require the Court to issue a summons for service by registered post, where, .....

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declare that the summons had been duly served on the defendant: Provided that where the summons was properly addressed, prepaid and duly sent by registered post, acknowledgement due, the declaration referred to in this subrule be made notwithstanding the fact that the acknowledgement having been lost or mislaid, or for any other reason, has not been received by the Court within thirty days from the date of the issue of summons." 13. The Hon ble Delhi High Court after analysing the said pro .....

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lar provisions to rule 19A were brought into existence w.e.f. the same date i.e.1.7.2002, which read as under: Order V, Rule 9 Delivery of summons by Court.- (1) Where the defendant resides within the jurisdiction of the Court in which the suit is instituted, or has an agent resident within that jurisdiction who is empowered to accept the service of the summons, the summons shall, unless the Court otherwise directs, be delivered or sent either to the proper officer to be served by him or one of .....

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uch courier services as are approved by the High Court or by the Court referred to in sub-rule (1) or by any other means of transmission of documents (including fax message or electronic mail service) provided by the rules made by the High Court: Provided that the service of summons under this sub-rule shall be made at the expenses of the plaintiff. (4) Notwithstanding anything contained in sub-rule (1), where a defendant resides outside the jurisdiction of the court in which the suit is institu .....

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tal employee or by any person authorised by the courier service to the effect that the defendant or his agent had refused to take delivery of the postal article containing the summons or had refused to accept the summons by any other means specified in sub-rule (3) when tendered or transmitted to him, - the Court issuing the summons shall declare that the summons had been duly served on the defendant: Provided that where the summons was properly addressed, pre-paid and duly sent by registered po .....

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le 9 reveals that both are identically worded and being applicable in relation to service of summons, where the defendant resides with in the jurisdiction of the court issuing the summons. However in the case of the assessee, the notice dated 14.11.95 was sent on the address given by the assessee of its office at Baroda (Gujrat) which is an out station and not with in the jurisidiction of the assessessing officer at Mumbai.The said rules are therefore not applicable to the case of the assessee. .....

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any other means as may be provided by the rules made by the High Court to any court (not being the High Court) having jurisdiction in the place where the defendant resides. HIGH COURT AMENDMENTS Rule 21-A BOMBAY, DADRA AND NAGAR HAVELI.- The following shall be inserted: Rule 21-A. Service of summons by prepaid post wherever the defendant may by residing if plaintiff so desires.- Notwithstanding anything in the foregoing rules and whether the defendant resides within the jurisdiction of the Cour .....

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e. In all other cases the Court shall hold such enquiry as it thinks fit and declare the summons to have been duly served or order such further service as may in its opinion be necessary. (1-11-1966) GUJARAT.- As in Bombay save that the rule begins with words the Court may and the words put in brackets are omitted. (17-8-1961). 16. The Hon ble Bombay High Court by virtue of its powers conferred under section 122 CPC has thus inserted Rule 21A as reproduced above, which provides that in cases whe .....

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s held that service by registered post is at any time a poor substitute for personal service which is directed by the Court. It is allowed to litigants as a matter of convenience. The court must allow the defendant a retrial ,if, after the decree had been passed against him on evidence that the summons was sent by registered post and returned refused, he appeared and denied that the packet had ever been delivered to him by the postal authorities. 17. Now coming to the facts of the present case, .....

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n the address written of the assessee on the said notice. Further a perusal of the letter of the postal authorities dated 12.12.96 reveals that it has been mentioned therein that the RL No. 563 dated 20.11.1995 was delivered to the addressee, however no name or address of the addressee has been mentioned in the said letter. So far so, even the date of delivery of the said letter has not been mentioned. The assessee has taken a specific objection that no such Regd. Letter has ever been received b .....

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